Thursday, February 21, 2013

ECB earns €555m on Greek bond holdings

Financial TimesFebruary 21, 2013

The European Central Bank said it earned €555m last year on its holdings of Greek sovereign bonds that were bought during the crisis in an attempt to calm financial market fears of a break-up of the eurozone.

The bank also revealed for the first time that nearly half of its holdings in the so-called Securities Markets Programme are of Italian debt. At the end of 2012 it held €99bn in Italian sovereign bonds, €30.8bn in Greek debt, €43.7bn in Spanish paper, €21.6bn in Portuguese debt and €13.6bn in Irish bonds.

The previously confidential figures were released by the ECB along with its annual accounts as part of a drive to increase transparency about its actions.

The SMP programme was wound down last year but has been replaced by another bond-buying programme that stands ready to buy more government debt as part of a pledge by Mario Draghi, ECB president, to do “whatever it takes” to prevent a break-up of the euro.

The earnings on the Greek debt are particularly significant as there has been a political agreement to pay back profits made from holding the bonds to the Greek government. Because the bonds still pay interest and were bought at depressed prices, they yield a lot of interest.

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This blog is dedicated to the understanding of the current Greek (but also European) economic, political and institutional crisis. It was created by Prof. Aristides Hatzis of the University of Athens, after many requests by his students who seek a source of reliable analysis on the Greek current affairs. Its aim is to post commentary and reports published mainly in the major U.S. and European media and to encourage a rigorous discussion.